H&R Block Exploring Strategic Alternatives for Its Bank

H&R Block is joining the ranks of those wondering whether it makes sense to be in the banking business as U.S. regulations continue to mount.

Associated Press

The tax preparer said today it hired Goldman Sachs to advise on “strategic alternatives” that could result in it escaping regulation from the Federal Reserve.

The Fed, thanks to Dodd-Frank, is going to force all of the nation’s banks and savings-and-loan institutes, like H&R, to hold more capital on their balance sheet, which has the effect of reducing profitability.

Insurance giant MetLife has also been looking to ditch its bank in a deal with GE Capital.

“We are a tax preparation company that offers financial products and related services as an added value to our clients, but operating within the regulatory constraints of these proposed rules would be cumbersome,” said CEO Bill Cobb.

The banking business has been a big money pot for HRB the past several years, generating $400 million in dividends and returned capital for the parent in the fiscal year ended April 30 and $262.5 million the prior fiscal year.

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